Trump Drops Lawsuit Against IRS, Establishes Compensation Fund
President Donald Trump has decided to withdraw his $10 billion lawsuit against the Internal Revenue Service (IRS) and instead create a compensation fund for individuals he believes were unfairly targeted by the government’s actions, according to a recent court filing.
The Justice Department confirmed the establishment of a $1.776 billion Anti-Weaponization Fund aimed at addressing concerns of those who feel they have been unjustly treated by legal means.
In documents submitted to the court, it was noted that Trump’s request for a “prejudiced dismissal” could hinder his ability to pursue the case later. The filing suggested that any legal costs would be addressed by both parties involved.
Back in January 2026, Trump initiated legal action against the IRS and the Treasury Department in a Miami federal court. His claims were based on the alleged mishandling of sensitive information after his tax records, dating back to his first term, were leaked in 2019. His sons, Donald Trump Jr. and Eric Trump, also joined the lawsuit.
In 2024, a former IRS contractor, Charles Littlejohn, was sentenced to five years in prison for leaking 15 years of Trump’s tax information, along with that of over 1,000 other taxpayers, to the media.
In September 2020, Trump stated he paid only $750 in taxes for the years 2016 and 2017, strongly denying any accusations of tax evasion. He claimed that while he and his businesses paid considerable taxes, they also took advantage of depreciation and tax credits, just like any other taxpayer.
Trump described his lawsuit as one filed in his role as a private citizen. However, questions arose in February when U.S. District Judge Kathleen Williams, appointed by Obama, challenged whether a sitting president could sue the executive branch.
Judge Williams instructed both parties to submit evidence of an incident or controversy by May 20, with a hearing set for May 27.
Democratic lawmakers expressed outrage regarding the proposed fund, suggesting that it might serve as a way for Trump to benefit politically. Congressman Jamie Raskin from Maryland criticized the fund, claiming it was a means for Trump to repay allies, labeling it an “unconstitutional” and “constitutional hoax.”
Nearly 100 House Democrats have voiced their opposition, led by Raskin and Representative Hakeem Jeffries, introducing legislation to block the settlement. They argued that this lawsuit stands on shaky legal ground.
The Anti-Weaponization Fund, announced by Attorney General Todd Blanche, is said to have the capability to “right wrongs” and provide both formal apologies and financial compensation to claimants. It is anticipated that the fund will cease operations no later than December 1, 2028.
The White House directed inquiries to the Justice Department, which had not provided comments by the time of publication.
